Tenant Signed Lease Then Lost Job Before Moving In--Now What?

Question

We recently signed a lease for a higher cost rental (3K per mo.). Tenants are slated to move in soon, but we have learned the tenants lost their jobs.

How would you handle this situation?

Chris Martin · Answer

We do have another cheaper unit that is open. I think I will offer them that. I want to be fair and not leave them in the cold, but we also have mortgage to pay.

Bill B. · Answer

What would the penalty be for not letting them move in? I mean in 2 or 3 months when the courts open? Might be cheaper than letting them move in and then not being able to evict. But yes talk to them. If the company is big enough to survive being closed and they’re important enough to rehire That would help.

Assuming a standard 3x income rule they were making over $100k combined. They should have resources to pay at least 1 more months rent (Through the end of May) it also sounds like they could have valuable job skills to get rehired and there’s always unemployment insurance.

Most people in that income range have decent credit and don’t want an eviction on their record 3 months from now after paying for a month or two. (Assuming the deposit is higher than a months rent and they don’t destroy the place you aren’t at high risk for the 3 month window.)

ps. I see now you have a cheaper unit also. I’d offer to let them move in to that one until they are fully re-employed and then tell them you’d be happy to move them to the other unit if it’s still available or if it becomes available again later.

Theresa Harris · Answer

@Chris Martin Have they given you the deposit and are they able to pay rent? I wouldn't hand over the keys until you get the first month's rent....with a money order or something they can't cancel. I would also give them the option of getting out of the lease before it starts and finding a new tenant.

Chris Martin · Answer

OP here. Just wanted to update that we ended up offering the tenants an "out" of the lease, expressing that we understand that the pandemic was creating uncertainty but that we need them to pay rent. They still wanted to move in and have been paying rent each month. They've been very easy tenants actually.

Account Closed · Answer

Since no evictions for awhile. Go have a bottle of ice cold Corona.

Chris Martin · Answer

Sure, I will update with how it goes.

Bill B. · Answer

Let us know. I always like to hear the outcome. Until then solutions are just options.

Chris Martin · Answer

We are going to give them an "out" and see if they take it.

Stephen J Davis · Answer

Do they still want to move in? I would do my best to get out of the lease based on not enough income.

Nathan Gesner · Answer

This is a common issue that Landlords need to prepare for. It sounds like you don't have a plan in place or a policy in writing, so you should probably just refund their deposit and try to find a replacement tenant as quickly as possible.

In the future, you may want to consider a termination clause. Mine says that if they fail to rent the property by the agreed date, they forfeit the deposit and I put the property back on the market. It's very clear and I make them initial the clause so they can't claim to be unaware. Works great.

Tenant Signed Lease Then Lost Job Before Moving In--Now What?

Tenant Signed Lease Then Lost Job Before Moving In--Now What?

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